"Harbor Business Observation" Shi Zifu Wang Lu
Tongwei Co., Ltd. (600438. SH) handed over a semi-annual report that continued the downward trend of revenue and net profit in 2023, and the magnitude appeared to be even greater.
Even if it is affected by industry fluctuations, Tongwei still needs to provide solutions on how to restructure and improve profitability.
01
In the first half of the year, revenue and net profit fell sharply
In the first half of 2024, Tongwei achieved revenue of 43.797 billion yuan, a year-on-year decrease of 40.87%; net profit attributable to the parent company -3.129 billion yuan, 13.27 billion yuan in the same period of the previous year, a year-on-year decrease of 123.58%; The net profit after deduction was -3.178 billion yuan, compared with 12.62 billion yuan in the same period of last year, down 12.519 billion year-on-year, and the net assets attributable to shareholders of listed companies were 53.329 billion yuan, down 13.33% year-on-year. The basic earnings per share loss was 0.6951 yuan, compared with 2.9477 yuan in the same period last year, a year-on-year decrease of 123.58%.
Tongwei Co., Ltd. said that the rapid development of the new energy industry has attracted a large number of new social investment in recent years, the gradual release of relevant production capacity, and the rapid and concentrated growth of the supply side have led to intensified market competition, and the prices of the main products in the photovoltaic industry where the company is located have dropped sharply year-on-year since the second half of 2023, and the company's profitability has been under pressure in stages.
"Despite the current cyclical pressure on the photovoltaic industry, during the reporting period, the company firmly focused on the long-term development strategy, closely focused on the two main businesses of 'clean energy' and 'green food', continued to consolidate the core competitiveness of the company, and laid a solid foundation for the company's long-term and steady development."
Specifically, Tongwei's operating cost in the first half of the year was 40.68 billion yuan, a year-on-year decrease of 16.61%, mainly due to the sharp decline in the price of the photovoltaic industry chain. At the same time, the net cash flow from operating activities was 961 million yuan, compared with 21.156 billion yuan in the same period of the previous year, a year-on-year decrease of 95.46%, mainly due to the decline in net profit.
At the investor relations activities disclosed by the company on September 4, Tongwei Co., Ltd. introduced that as of the end of the first half of 2024, the company's cash and transactional financial assets in hand totaled more than 34 billion yuan, short-term borrowings were only about 2.5 billion yuan, and non-current liabilities due within one year were about 4.2 billion yuan, and the debt repayment provision was sufficient; In the same period, the company's asset-liability ratio was about 67%, and if the impact of bill pool business and existing convertible bonds was excluded, the asset-liability ratio could be further reduced, and the industry continued to maintain a stable level; The company also has a wealth of financing tools, and has maintained a high degree of smoothness in bank credit, ultra-short-term financing, medium-term notes, etc., and has significant advantages in terms of financing scale, financing interest rate and term.
Tongwei Co., Ltd. emphasized that the current photovoltaic industry is at the bottom of the phased cycle, and the company will continue to dynamically evaluate the construction plan of unstarted projects based on market conditions and its own capital use arrangements, properly manage capital risks, and ensure the company's financial security.
AVIC Securities Research Report believes that based on the company's polysilicon production capacity scale and comprehensive production advantages, the current polysilicon production link remains at full capacity in the downward cycle of the industry. At present, the company has more than 650,000 tons of high-purity crystalline silicon production capacity, of which the Yunnan 200,000-ton polysilicon project was successfully put into operation in May this year, and the Baotou 200,000-ton high-purity crystalline silicon project is expected to be completed and put into operation before the end of the year, and the Ordos 400,000-ton high-purity crystalline silicon project is carrying out preliminary preparations, and it is expected that the company's high-purity crystalline silicon production capacity will reach 80~1 million tons in 2024~2026. In 2023, the company will lay out upstream industrial silicon production capacity, and it is expected that the Damaoqi Phase I and Cangxi Phase I industrial silicon projects will be completed and put into operation by the end of the year, which will help the company enhance its ability to reduce the cost of raw materials and enhance its advantages in supply and traceability.
02
The industry is under pressure and continues to lose money
As for the pressure on the industry, AVIC Securities pointed out that in the first half of 2024, the price of the photovoltaic industry chain will continue to decline, the profit margin of enterprises will shrink rapidly, and the price of multiple links will break through the cost line, according to the statistics of CPIA and other professional institutions, the output of polysilicon/wafers/cells/modules in the mainland in 1~6 months increased by about 60.6%/58.9%/37.8%/32.2% year-on-year respectively, but the price decline in each link reached -40%/-48%/-36%/-15% respectively. The industry pattern is changing rapidly, and some enterprises have high inventories and tight funds, which leads to production cuts and shutdowns, while the head enterprises have strong comprehensive strength and effectively consolidate their market share.
Minsheng Securities pointed out that the company's performance was under short-term pressure due to the oversupply of the photovoltaic industry chain, the sharp decline in product prices, and the provision for asset impairment losses of 2.255 billion yuan (including 2.253 billion yuan for inventory price declines) and credit impairment losses of 115 million yuan.
Soochow Securities said that due to intensified competition in the industry, downward prices, and downward revision of profit forecasts, it is expected that the company's net profit attributable to the parent company in 2024-2026 will be -50/38/6.5 billion yuan (the previous value of 2024-2026 will be 31/45/8 billion yuan), a year-on-year increase of -137%/+177%/+71%, maintaining a "buy" rating.
The investment advice given by Ping An Securities is: considering the current supply and demand situation of the photovoltaic industry, adjusting the company's profit forecast (temporarily ignoring the consolidation of Runyang shares to be acquired), it is expected that the net profit attributable to the parent company from 2024 to 2026 will be -4.864, 1.211 and 3.782 billion yuan respectively (the original forecast value is 6.49, 3.363 and 5.252 billion yuan), and the corresponding dynamic PE will be -16.9, 67.7 and 21.7 times respectively. In the short term, the supply and demand of the PV module industry chain is relaxed, and the profitability of each major link is obviously under pressure or even a large loss, the company has outstanding technical and cost advantages in polysilicon, cells, modules and other links, combined with excellent refined management capabilities, it is expected to cross the industry trough and expand its competitive advantage, and maintain the company's "recommended" rating.
In fact, Tongwei's performance in the first half of the year has "fallen" significantly, largely continuing the pressure trend in 2023.
In 2023, Tongwei will achieve operating income of 139.104 billion yuan, a year-on-year decrease of 2.33%; the net profit attributable to the parent company was 13.574 billion yuan, a year-on-year decrease of 47.25%; deducted non-net profit of 13.613 billion yuan, a year-on-year decrease of 48.73%.
In the first quarter of this year, the company achieved revenue of 19.570 billion yuan, a year-on-year decrease of 41.13%; net profit attributable to the parent company -787 million yuan, down 109.15% year-on-year; deducted non-net profit of -790 million yuan, down 109.29% year-on-year.
03
Selling expenses have increased significantly, and the stock price has fallen by 40% in the past year
It is worth noting that on the one hand, the performance declined, but on the other hand, the selling expenses continued to increase significantly.
In the first half of this year, Tongwei's sales expenses were 1.038 billion yuan, a year-on-year increase of 32.41%.
Over the longer term, selling expenses are also at their highest level in years. From the 2020 interim report to the 2024 interim report, the sales expenses of Tongwei shares were 449.1 million, 403.9 million, 491.8 million, 783.7 million and 1.038 billion respectively.
In response to the sharp increase in sales expenses in the first half of the year, Tongwei said that it was mainly due to the expansion of photovoltaic module business.
According to a research report by Ping An Securities, the TOPCon cell production capacity exceeded 100GW at the end of the year, and module sales doubled. More than 35GW of battery sales (including self-consumption) were basically flat year-on-year. Up to now, about 38GW of PERC production capacity has been fully transformed, Meishan's 16GW TNC new cell production capacity will be put into operation in the first half of the year, Shuangliu's 25GW TNC production capacity is expected to be fully operational by the end of the year, and the company's TNC cell production capacity will exceed 100GW by the end of 2024. In the first half of the year, the company's module sales volume was 18.67GW, a year-on-year increase of 108.36%, and it newly developed important overseas markets such as South Africa and U.A.E., and successively won module orders from overseas well-known customers such as AMEAPower in South Africa, Baywa in Spain, and GLODENI SOLAR in Romania.
Tongwei Co., Ltd. also previously introduced that the company's module shipments in the first half of the year were still dominated by domestic centralized power stations. In terms of overseas, the company continued to deepen all-round strategic cooperation with key global distributors and overseas EPC developers, and accelerated market development with the help of N-type large-version products, and the proportion of overseas shipments also increased year-on-year.
In addition, judging from the trend of the capital market, in the past year, the share price of Tongwei shares has fallen by 40%. (Produced by Harbour Finance)